Background/History of the Final Rule

“No-Match” letters are issued by the Social Security Administration (SSA) to employers when an employee’s name and social security number do not match SSA records. The Department of Homeland Security (DHS) also may issue no-match letters to employers when it becomes aware (usually after an audit) that the immigration status or employment authorization documentation presented or referenced by an employee in completing Form I-9 was not assigned to the employee according to DHS records. Employers have long been in a quandary regarding what, if any, obligations they had after receiving a no-match letter regarding one or more of their employees.

On August 10, 2007, the DHS published a final rule (which was to become effective September 14, 2007) setting forth an employer’s duties upon the receipt of a “no-match” letter from either the SSA or the DHS. Under the DHS final rule, an employer may be considered to have knowingly employed an unauthorized individual, in violation of the Immigration and Nationality Act, if the employer fails to take “reasonable steps” after receiving a no-match letter if, in fact, it turns out that that employee is actually not authorized to work. If, however, the employer follows the reasonable steps (outlined by DHS in the rule), and takes the appropriate action in accordance with those steps, it will avail itself of a “safe harbor.” This means that, even if the employer continues to employ the employee and it turns out the employee actually is unauthorized, DHS will not deem the employer to have constructive knowledge of the employee’s unauthorized status. We issued a Management Alert in August 2007 detailing the DHS-relegated reasonable steps and safe harbor provisions.

Before the final rule became effective, however, the U.S. District Court for the Northern District of California issued an injunction preventing the final rule from taking effect. The court’s injunction was based on its concerns that the rule exhibited an arbitrary and capricious policy shift for DHS in violation of federal law and that DHS was unauthorized to promulgate certain aspects of the rule.

The Supplemental Final Rule

In March 2008, DHS published a supplemental proposed rule that addressed the court’s concerns and, on October 28, 2008, DHS issued the Supplemental Final Rule. The Supplemental Final Rule is technically effective immediately. But the Rule cannot be implemented until the injunction is lifted by the court. DHS has petitioned the court to lift the injunction, but the court has yet to rule.

Because the Supplemental Final Rule was crafted to address the court’s concerns, there is a likelihood that the court will lift the injunction. At that time, SSA and DHS could again begin issuing no-match letters and employers would be required to follow the provisions of the Supplemental Final Rule (which are unchanged from the final rule issued in August 2007) or potentially face being deemed to have knowingly employed individuals unauthorized to work in the U.S.

The Supplemental Final Rule establishes separate sets of “reasonable steps” an employer must take depending on whether the no-match letter is received from the SSA or the DHS. When a no-match letter is received from the SSA (as opposed to the DHS), an employer must take the following “reasonable steps” in order to avail itself of the safe harbor provisions:

  • Within 30 days of receiving the SSA no-match letter, the employer must verify that the discrepancy is not the result of errors in its internal documentation, such as a typographical, transcription or similar clerical error. If the discrepancy is simply a clerical error, the employer must correct the error and verify that the employee’s name and social security number, as corrected, match the SSA’s records, and must make a record of the manner, date and time of such verification and file that record with the employee’s original I-9.
  • If the discrepancy is not an employer clerical error, the employer must, within the same 30-day period, request the affected employee to confirm that the name and social security number in the employer’s records are correct. If the employee states that the employer’s records are in error, the employer must take action to correct its records and then verify that the new information, as corrected, matches SSA’s records, and make a record of the manner, date and time of such verification and file that record with the employee’s original I-9. If the employee states that the employer’s documentation is correct, the employer must inform the employee to resolve the discrepancy directly with the SSA and that the employee must do so within 90 days of the employer’s receipt of the no-match letter.
  • In the event that, within 90 days of receiving the SSA no-match letter, the employer has been unable to verify with the SSA that the employee’s name corresponds with the number assigned to that name in the SSA’s records, the employer must, within an additional three days, verify the employee’s employment authorization by following the modified I-9 procedures listed below.

When a no-match letter is received from the DHS, an employer must take the following “reasonable steps” in order to avail itself of the safe harbor provisions:

  • Within 30 days of receiving the no-match letter, the employer must contact the local DHS office (in accordance with the written notice’s instructions, if any) and attempt to resolve the question raised by the DHS about the immigration status document or employment authorization document. If the no-match letter requests action by the employee, the employer must notify the employee of any such requirements. The employer must complete this step within 30 days of receiving the written notice.
  • In the event that, within 90 days of receiving the no-match letter, the employer cannot verify with the DHS that the document was assigned to the employee, the employer must, within an additional three days, verify the employee’s employment authorization and identity by following the modified I-9 procedures listed below.

The modified I-9 verification process that must be followed in order for employers to avail themselves of the safe-harbor provision is as follows:

  • The employer should complete a new Form I–9 for the employee, using the same procedures as if the employee were newly hired, except that:
  • Both Section 1—“Employee Information and Verification”—and Section 2—“Employer Review and Verification”—of the new Form I–9 must be completed between the 91st and 93rd days of receiving the no-match letter (as opposed to within the first three days of employment for new hires);
  • No document containing the social security number or alien number that is the subject of the no-match letter, and no receipt for an application for a replacement of such document, may be used to establish employment authorization or identity or both; and
  • No document without a photograph may be used to establish identity or both identity and employment authorization; and
  • The employer must retain the new Form I–9 with the prior Form(s) I–9 for the same period and in the same manner as the employer is obligated to retain the prior I-9(s).

It is important to realize that compliance with the prescribed reasonable steps only gives the employer safe harbor with respect to the no-match letter. If the employer has actual knowledge that the employee is not authorized to work in the U.S., or if other factors beyond the no-match letter ought to have put the employer on notice that the employee was not, in fact, authorized to work, the DHS may still find the employer has violated the law by knowingly employing an unauthorized worker.

Discrimination Concerns

One last precaution: In carrying out the reasonable steps—whether those specifically detailed by the DHS in the final rules or otherwise—employers must be sure to do so in the same manner for all employees regarding whom they receive a no-match letter. Employers may not adopt one set of reasonable steps for employees of certain ethnicities or national origins and another set for individuals from other groups. Adopting different practices for employees that appear or sound foreign may likely lead to discrimination charges under either Title VII or the anti-discrimination provisions of the Immigration and Nationality Act itself.